Real estate credit: the granting rules made binding, under penalty of sanctions

Europe 1 with AFP 6:14 p.m., September 14, 2021

The High Financial Stability Council (HCSF), which associates among others the Ministry of the Economy and the Bank of France, decided on Tuesday to make binding the rules for granting real estate credit, under penalty of sanctions.

The criteria, until now mere recommendations, had been relaxed last year, but financial authorities had meanwhile warned that they intended to make them mandatory, which will be the case on January 1, 2022.

Maximum 35% effort rate

"As planned since December 2020, the HCSF therefore transforms its recommendation into a legally binding standard, without changing the criteria," he said in his decision.

These rules consist of an effort rate, i.e. the total amount of housing-related expenses in relation to income, of 35% maximum, a debt period of 27 years at most in certain cases and the possibility of derogating from these criteria for 20% of the appropriations.

These exemptions must concern 80% the acquisition of a main residence and 30% of first-time buyers.

The maximum duration of 27 years, for its part, will concern households which will have, for example, work to be done before being able to move in.

They will then have the option of getting into debt over 25 years and defer the start of their repayment by two years.

One-fifth of non-conforming loans?

On average, 20.9% of loans granted by large banking networks do not comply with recommendations, according to the HCSF, which therefore notes that these establishments "now respect this ceiling (of 20%) or are in the process of respecting it. quickly".

It is the policeman of the financial sector, the Prudential Control and Resolution Authority (ACPR), who will be responsible for verification and, where applicable, sanctions, based on monthly reports shared by financial institutions.